The Monadelphous Group Ltd (ASX: MND) share price is lifting on Wednesday morning.
In early trade, the ASX 200 engineering company's shares are up 1% to $14.16.
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Why is this ASX 200 share rising?
Investors have been buying Monadelphous shares this morning after the company announced its second lithium-related contract win in the space of a week.
Hot on the heels of a $160 million construction contract from Talison Lithium last week, the ASX 200 share has been selected by Liontown Resources Ltd (ASX: LTR) for a major contract at the Kathleen Valley Lithium Project in Western Australia.
According to the release, Monadelphous has been awarded a multidisciplinary construction contract valued at approximately $100 million for the construction of the wet plant at Kathleen Valley.
The works under the contract are expected to take nine months and be completed in mid-2024, just in time for Liontown to commence spodumene production as planned.
The ASX 200 share's managing director, Zoran Bebic, notes that the contract extends the company's significant portfolio of construction work secured to date this financial year. He also feels it is a testament to Monadelphous' strong reputation for the safe and reliable delivery of major resource projects. Bebic adds:
We are extremely pleased to have been awarded this significant contract in the growing energy transition metals sector, and look forward to continuing to develop our relationship with Liontown Resources.
Should you invest?
According to a recent note out of Citi, its analysts have put a buy rating and $15.30 price target on the ASX 200 share.
This implies a potential upside of 8% for investors from current levels. Citi is also expecting a 4%+ dividend yield in FY 2024. Last week, it said:
E&C order book continues to grow for MND as project awards are gaining momentum and finally crystallising. […] Secured contract awards in E&C since the start of FY23 is now A$800mn with >50% of this coming through post-FY23. We think momentum is likely to persist with other large imminent E&C opportunities (excl. sustaining capital works) in lithium and rare earths space. We estimate the quantum to be between A$1-1.4bn over the next 2 years and believe MND is well placed to benefit from accelerating project award momentum. We expect the announcement to be well received by the market.
